Athira Sethu
Kochi, 2 November 2026
There are several problems in the aviation sector of India owing to increasing fuel prices, operational cost and the existing conflict in West Asia. The rating agency, ICRA, predicts that the loss of Indian airlines may touch ₹38,000 crore in the fiscal year ending in March 2027.
The growth in air passenger traffic in India is predicted to be in the range of 3% to 6% in the present fiscal year. The international passenger traffic in Indian airlines may drop to 3%-6% owing to travel disruptions owing to the West Asia conflict.
It has remained negative in its outlook about the aviation industry as any further complications may affect the earnings of airlines and air passenger traffic.
In September 2026, there has been a drop of 6.5% in domestic air passenger traffic from the same period of the previous year. There have been 1.18 crore passengers on flights while 1.26 crore passengers had travelled in the month of September in 2025.
The number of passengers was 2.5% lower than that of August.
The reason behind it is less availability of flights and higher fares.
Domestic passenger traffic in the first six months of FY27 was down 1.9% to 7.86 crore passengers. For Indian Airlines, international passenger traffic has reduced by 19.3% due to airspace restrictions and disruption of flights in West Asia.
The one of the major issues faced by airlines is increase in price of aviation fuel.
In October, the price of aviation turbine fuel was 46.2% higher from the previous year. The price of aviation turbine fuel is also 13.2% higher than the price recorded in September.
Fuel makes up roughly 30% to 40% of an airline’s operating cost.
Weaker Indian rupee has made things worse for airlines because they need to pay certain costs such as rental payments and maintenance of the aircraft in US dollars.
Airlines like IndiGo, Air India, Air India Express and Akasa Air are charging fuel surcharge.
Domestic passengers will be charged extra fees ranging from ₹375 to ₹1,200 per ticket.
Aircraft shortage and engine issues are two other challenges that the industry is facing.
As of August 2026, almost 19% to 20% of the entire airline fleet had been grounded.
This has compelled some airlines to rent aircrafts for extra money.
According to ICRA, the future performance of the industry will largely depend on fuel rates, travel during the festive period and the situation in West Asia.
Indian airlines are expected to incur more losses if the crisis persists or deteriorates further.
